NEW YORK — The Goodyear Tire & Rubber Co. reported a steep drop in third-quarter profit and slashed its outlook as raw material costs surged.
While the results topped Wall Street expectations, the outlook weighed down shares. The tire maker’s stock fell $1.79, or 5.3 percent, to $31.88 in morning trading.
Profit fell 59 percent to $129 million, or 50 cents per share. Earnings, adjusted for non-recurring costs, were 71 cents per share. Revenue rose 1.9 percent to $3.92 billion.
The results surpassed Wall Street expectations. The average estimate of five analysts surveyed by Zacks Investment Research was for earnings of 67 cents per share, while three analysts surveyed expected $3.91 billion in revenue.
Tire sale volumes fell 5 percent and costs rose about 12 percent during the quarter. The company also dealt with the impact of Hurricane Harvey, which damaged chemical plants in Texas, along with retail and distribution operations.
The Akron, Ohio-based company said raw material costs jumped more than 30 percent. The increase in costs, along with production cuts and other factors, prompted Goodyear to cut its forecast for operating income. It now expects $1.5 billion, down from a prior outlook for $1.6 billion to $1.65 billion.
The company’s board also authorized a dividend increase of 40 percent. Goodyear will pay a quarterly dividend of 14 cents per share — up from 10 cents — on Dec. 1 to shareholders of record Nov. 1.
Goodyear shares have increased 9 percent since the beginning of the year, while the Standard & Poor’s 500 index has climbed 14 percent. The stock has climbed nearly 8 percent in the last 12 months.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on GT at https://www.zacks.com/ap/GT